There are strong positive forces, starting to create momentum on the Bulgarian energy efficiency market, shaping a promising trend and outlining opportunities that the advanced market players in the ecosystem are taking steps to seize and build on, structuring sophisticated teams and innovative business models. Still, there is a great appetite for grant resources on the client side, both public and private, resulting in passivity even in cases when the cost of waiting for “free” money is greater than a potential ESCO contract.
Recent changes in the Energy Efficiency Act oblige local energy traders to realize energy savings that should amount cumulatively by the end of 2020 to 2 772 GWh. The scheme will be prolonged till 2030 and talks are on the table for even further extension, which guarantees a multibillion market for energy efficiency in Bulgaria. Additionally, the same Act sets obligations on the client side, bringing tens of millions sq. meters to the market for realization of energy efficiency measures. For example, public buildings stock is nearly 20 million sq. meters and has to improve every year in terms of energy efficiency parameters (Figure 2). Another strong market force follows the Government policy to provide 100% financial support for renovation of the multifamily buildings stock, which is estimated to be 117 million sq. meters. In such constellation, having in mind that the main competitor to market instruments is gradually disappearing (grants), it’s the ESCO that will have the best chance to become the main enabler for realization of energy efficiency policy and for fulfilling the national energy savings obligations. In that respect, the Sustainable Energy Development Agency (SEDA) is very active by organizing campaigns throughout the country for popularization of ESCO business models, benefits of energy management and best practices. Recently, ESCO contract examples to be used by the ecosystem have been developed by SEDA, as well as a marketplace for projects is on the way in partnership with the Alliance for Energy Efficiency (organization of ESCO companies).
A very positive new development is the open data policy by SEDA, allowing for identification and allocation of investment ready energy saving possibilities owing to the Enerfund project. At this stage over 5 000 energy audits are registered, prescribing investments of nearly 800 million euro.
On the flip side, a lot remains to be done in terms of communication, training and persuasion so that clients build enough confidence in advanced market-based instruments for energy efficiency realization and convince themselves that grants won’t come back. To add to the list, there are ambiguities due to over-regulation and misunderstanding in the public sector which makes the ESCO contracts vulnerable to obstructions. Lastly, the access to capital for energy efficiency is still comparable with that of “standard financing” which sets a lower priority to these kind of projects in the clients’ and ESCO companies’ agendas. Thankfully, Fund Manager of Financial Instruments in Bulgaria (FMFIB) has started to provide guarantees, but the scale and parameters are still falling behind the challenges in the sector.